PEGASYSTEMS INC 8-K

What Happened Pegasystems Inc.'s Compensation Committee approved the 2026 Section 16 Officer/ALT Member Corporate Incentive Compensation Plan on February 9, 2026, covering the performance period January 1–December 31, 2026. The plan establishes a bonus pool for executive officers tied to Corporate Goals weighted 75% financial and 25% strategic. The overall Funding Percentage determines plan funding: if below 70% the plan is not funded; if above 100% the Board may authorize an enhanced incentive. Individual payouts are conditioned on continued active employment and may be adjusted for individual performance.

The Company also permits each executive to elect to receive 50% of their target incentive as restricted stock units (RSUs) instead of cash. RSU grants will be made in March 2026; the number of RSUs equals 50% of the target incentive divided by 85% of the closing stock price on the grant date. RSUs vest 100% on or about the incentive payout date in 2027, subject to threshold funding of the plan, continued employment, and individual performance; awards that do not meet vesting conditions will expire.

Key Details

• Approval date: February 9, 2026; Incentive Period: January 1–December 31, 2026.
• Corporate Goals weighting: 75% financial / 25% strategic.
• Funding threshold: <70% Funding Percentage → no funding; >100% → possible enhanced funding at Board discretion.
• RSU option: executives may elect 50% of target as RSUs; RSU count = (50% of target) / (85% of closing stock price); grants in March 2026, vest ~payout date in 2027.

Why It Matters This filing outlines how Pegasystems will link executive pay to company financial and strategic performance for 2026, which can influence management focus and decision-making. The RSU election offers executives a stock-based alternative to cash, potentially conserving company cash in 2026 but creating future equity issuance (dilution) if RSUs vest. The clear funding threshold (70%) means that failure to meet minimum corporate goals would result in no payouts under the plan, while strong performance could trigger Board-approved enhanced awards. Investors should note these mechanics when assessing executive incentives and potential future equity impacts.